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Bitcoin plummeted 5% Thursday night after major industrial bank Silvergate Capital filed a belated filing on Wednesday casting doubt on the future of its business.

In line with Bitcoin, the total market cap for crypto assets fell 4.6% from $1.06 trillion to $1.02 trillion between 8:18 p.m. and 9:05 p.m. Thursday New York time.

Bitcoin hasn't fallen as fast and sharply since the price fell 4% from $20,538 to $19,704 on Tuesday morning, November 8, as FTT, the token for crypto exchange FTX, saw massive withdrawals was faced.

Bitcoin (BTC-USD) is changing hands at $22,381, down 4.3% in the last 24 hours and 6.4% over the past week.

“After today's drop, the pullback is close to 10% and Bitcoin is on track to close below its 50-day moving average (DMA) for the first time in almost two months,” BeSpoke said in a statement from Friday.

For the past two days, the crypto market has grappled with the possible failure of industry serving bank Silvergate.

“Fortunately, Silvergate is not FTX. Silvergate is more of a fiat entry/exit for US dollars than a major source of liquidity and volume for the entire crypto ecosystem,” said Michael Safai, co-founder and partner at crypto proprietary trading firm Dexterity Capital.

Silvergate, headquartered in La Jolla, Calif., said in a late statement Wednesday that it was further delaying its annual report due to larger losses than preliminary January results in addition to “certain regulatory and other investigations and investigations that are pending regarding the becoming a company” and its “ability to continue as a going concern for the twelve months following the release of these financial statements,” the filing reads.

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By Thursday, major crypto exchanges and corporations were quickly distancing themselves from Silvergate. The shares of the bank (S.I) fell 57% from $13.50 to $5.78 on the day.

Coinbase, Paxos, Galaxy Digital, Gemini, BitStamp, Crypto.com, Cboe Digital, GSR and Circle continued to exacerbate Silvergate's business challenges, each issuing statements saying they have ties to what was once considered a crucial banking partner for canceled the sector respected companies.

Stablecoin issuer Circle added that it is “in the process of transacting certain services with them.”

Separately, Binance US and Kraken declined to comment on their involvement in Silvergate.

“There is some dismay at the Silvergate news, but it is not clear that it would trigger strong selling,” Noelle Acheson, author of the Crypto Is Macro Now newsletter, told Yahoo Finance on Friday.

Dexterity's Safal agreed: “It's more about jaded digesting the news and not wanting to be left with potential ticking time bombs, but don't understand how that differs from the 2022 collapses.”

Safai also hinted that the reaction may have come from Asian markets reacting to the exodus of firms from Silvergate.

On Thursday, March 2, $203 million in long bitcoin positions, or $198 million after deducting short liquidations, were liquidated — the most in a single day in three weeks, according to the crypto Derivatives aggregator Coinglass.

As Acheson noted in her Friday newsletter, given the small change in ETH to BTC ratio, Bitcoin's sharp drop hit second-largest cryptocurrency Ether “in equal measure.” Ether is changing hands at $1,570 per coin, down less than 4% from the previous day as of Friday morning 8:30 am New York time.

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In a worst-case scenario of Silvergate failing, confidence could be shattered, which could cause some companies to pull capital out of the market, Dexterity's Safai said.

“That alone could hurt liquidity, but that wouldn't have a ripple effect per se, nor would it last long,” he added.

More important to Acheson is the impact on bank access if a traditional bank were to “go under” because of its crypto activities.

“That would give regulators strong ammunition that crypto risk could become ‘systemic' and any financial institution serving the crypto industry could face new roadblocks,” Acheson explained via a messaging app.

“There is uncertainty right now,” she added.

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By Rebecca French

Rebecca French writes books about Technology and smartwatches. Her books have received starred reviews in Technology Shout, Publishers Weekly, Library Journal, and Booklist. She is a New York Times and a USA Today Bestseller...